Dec Pillows Makers Pressed on Price
Cecile Corral -- Home Textiles Today, November 17, 2008
Two months ago, HTT reported that dec pillow suppliers were confident about their business, calling it "recession-proof" — but undoubtedly concerned about retailers' push to reduce inventories.
That unease about inventory levels persists, and now has been weighed down by other matters, like demands for lower prices and the ongoing liquidation of Linens 'n Things and Mervyns.
Yet, several decorative pillow manufacturers and importers insist their wares are recession-proof, and they continue to churn sales — even if less than usual — across the scope of retail, from discounters to high-end department stores.
"Decorative pillows is a category that has really held its own," said David Frankel, president, Arlee Home Fashions (New York). The company posted $45 million in category sales last year and ranked as the second-largest supplier in the United States.
"Our pillow business is actually very good right now, and some of that is because we've picked up some additional business," he continued.
"Our pillow business is our best business out there," concurred Corey Faul, president of diversified supplier Newport/Layton Home Fashions (Portland, Ore.). The company expects to post moderate sales gains for the category by yearend, thanks largely to healthy sales increases in its outdoor cushion assortments. That sub-category, said Faul, is one "we weren't playing in before, but are now and getting more attention in stores with increased placement within our current regular distribution channels."
New York-based Westgate/HFI, which launched its dec pillow division more than three years ago, describes its growing business as performing "better than ever," said Neil Zuber, evp.
"When we get into that third and fourth year, our business continues to extend because we have more exposure," Zuber explained. "And now the business climate is right for us because we have a huge line. We can offer dec pillows in any of thousands of fabrics because [our fabric division, ADF] makes 500 to 600 new fabrics every season. About 20% of our line is out of the ADF line."
But making such sales strides has not been easily achieved. The liquidations of LNT and Mervyns continue to create daunting obstacles for dec pillow suppliers.
"No question — if you go into any strip mall in the country, you'll find huge going-out-of-business banners," said Loren Sweet, president of Brentwood Originals, based in Carson, Calif. "The prices are not very good, but people are drawn to their out-of-business concept. The bottom line is [LNT and Mervyns] are drawing in a lot of customers, and traffic is what retailers are fighting for right now."
Fueled by this fire, merchants are increasingly demanding sharper wholesale prices, and then selling the goods for less than the traditionally popular price points, Sweet noted.
"The driving factor in business today is price. End of story," he said. "Pricing is different for everyone, but relatively speaking, if a certain pillow normally averages for $20, now it's $15, and if it used to sell for $10, now its $7."
Not everyone agrees entirely with that view.
Carolyn Winderbaum, product development manager for Caldeira USA, has noticed that consumers are "looking for a deal," driving them to make LNT and Mervyns their first shopping stops "before they make a purchase." But ultimately, she said, "I don't think price will be enough for certain people if they are looking for specific fashion item. They will still have to go to the retailers who are selling that look for a price."
That's not to say Caldeira — which focuses its business at specialty and department stores — hasn't had to make a price adjustment here and there to accommodate a retail customer.
"Everybody is looking for the best deal so they can possibly get to make more money," Winderbaum said. "We recently had to bend a little on price but we didn't compromise the product. It's tough to compete in certain areas at discount, but we don't sell them. Selling the specialty stores, we'll have to bend less."
Fashion Pillows, a division of Griffin, Ga.-based American Mills, domestically produces all of its dec pillows, which restricts it from being flexible on prices. "Our pillows are made here, and we know that makes the product a tad more expensive," said Cindy Suddreth, vp sales. "But when money opens up at retailers, we can react quickly. They don't have to wait the 90 to 120 days they do for imports. It's how we remain competitive. We have no room to go down, nor do we want to go up, so as not to price ourselves out of the marketplace."
Fashion Pillows' key price point bracket is $19.99 to $24.99.
Fighting another version of this pricing war is New York-based Décor by Beader's Touch. "Many retailers seem to be getting very good deals for closeouts from LNT and Mervyns, so they don't want fresh product from suppliers like us," said design director Rekha Gadhvi. "And when they do come to us, the prices they are asking for are about half of what they normally pay for our products."
All the same, the company has maintained its most popular price brackets — $16.99 to $19.99 and even $75 at the high-end department store channel — for its embellished and embroidered silk looks.
Nancy Spencer, owner of Spencer N. Enterprises in El Monte, Calif., observed, "Going down to $7.99 and $9.99 has not worked for most stores. What has been successful is added value at the $14.99 to $17.99 price points. And it's maintained by the suppliers adding inches to the pillows, going from 18-inch to 20-inch or from 15-by-20 to 14-by-27, for example. You sell a larger size for the same price."
Spencer added that many retailers have been "very smart about how they attack the dec pillow category," and that she said is because "they haven't lost faith. They are moving forward and trying new things — not devaluating the current assortment."
To avoid spending more to make a pillow for the same or a reduced price, several dec pillow companies are becoming creative with the way they approach their designs.
"I can't go lower on price and I'm not willing to sacrifice the quality of my pillows — I don't want to do anything different to my product that won't allow me to keep the quality," explained Marlo Lorenz, founder and designer of Islip, N.Y.-based Thro. "So I find ways to embellish the fabric to give the ultimate consumer a well-perceived value."
More specifically, Lorenz, whose company serves mainly department stores, is "trying to be creative with my base cloth. Instead of a 100% linen, I'm using a linen-poly blend, and rather than 100% silks I'm using faux silks. But I'm adding more embroidery and more embellishments. This way, the perceived value is there and I can offer it at the same price. I'm doing more to the pillows to make them look expensive even though they are not."
Pakistan-based Crescent Textile Mills/Crestex, a longtime yarn, greige and fabric manufacturer that fairly recently added finished dec pillows to its assortment, has also homed in on dressier looks to meet market price demands.
The business has become "more and more challenging, with increasing competition and stiffening economies world over," said Rehana Mallik, manager, concept and design. However, the company's embellished decorative pillows are "doing well," she said, at the mid-tier market in the U.S. as well as in Europe and Canada.
Taking a stab at the business with a different agenda is Rizzy Home, Calhoun, Ga. The company's latest approach is to marry its dec pillows with Rizzy's core textiles line — area rugs. Of its more than 400 looks launched less than two years ago, there are 40 that coordinate directly — in design and construction — to Rizzy's most popular area rug collections.
"We started doing this in July as a test and it's been very good for us," said Mark Ferullo, vp at Rizzy. "It has been very popular with our furniture store customers, so we're planning on expanding the assortment soon."
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